On Wednesday, crude oil prices began to make another round of slump. West Texas crude futures are about to close by 6.5 percent, while the global Brent benchmark is down by 4 percent.
This will be the first time Brent futures have completed trading below $30 per barrel in more than six years, if current prices hold until close.
In the past two days, the price of crude oil in Brent has fallen below US$ 30 per barrel as global oil demand is expected to decrease as more countries clamp down.
Global demand for oil is projected to drop for the first time since 2009 in 2020, according to the International Energy Agency (IEA). The agency said global demand for oil had already dropped by 2.5 percent in the first quarter of 2020, wiping out 2.6 million barrels per day. The agency does expect oil demand to rebound by 1.1 mb/d in the second half of the year relative to the second half of 2019.
WTI crude oil futures prices were adjusted to a new low session of $27.79, which wiped out Tuesday night's low at $28.10. The low at $27.34 from last week continues amid downward expectations. The fall to new lows also led to moving the US dollar to Canadian dollar currency pair to a new high of 1.4245.
Travel restrictions, border closures and self-quarantine warnings in the midst of the coronavirus pandemic have heightened fears of a global recession and driven fund managers to step up selling off contracts for crude oil and fuels, data published by Reuters' John Kemp shows.
Although things started looking up for oil after the first sell-off wave just two weeks ago, now the future looks grim. Money managers have sold some 180 million barrels of oil and fuel contracts since February 18, Kemp said, which doesn't bode well for this particular commodity market as prices have been dropping during this time and it hasn't deterred the selling funds.
Today's sell-off, the next step down in a two-month span that has seen oil prices plunge nearly 60 percent since the beginning of January, was the product of the word that Saudi Arabia is planning even more aggressive actions to restore itself as the global oil giant with more oil deliveries.
Earlier this month, the Organization for Economic Cooperation and Development said global economic growth would rise by 1.5 percent in 2020, down from its previous forecast of 2.9 percent prior to the Covid-19 outbreak.
Saudi Arabia has again intensified the oil price war by announcing plans to raise its oil exports to 10 million bpd from May. This represents 3 million bpd more than it was exported in February.
